The Association of GM Korea Suppliers issued an impassioned plea on August 22 for a rapid resolution to the ongoing labor negotiations at GM Korea. (Image courtesy of Yonhap)
SEOUL, Aug. 23 (Korea Bizwire) – The Association of GM Korea Suppliers, representing a crucial link in the automotive manufacturing chain, issued an impassioned plea on August 22 for a rapid resolution to the ongoing labor negotiations at GM Korea, highlighting the severe financial strain placed on supplier companies due to prolonged partial strikes.
In a statement, the association laid bare the dire circumstances facing GM Korea’s network of suppliers.
“The strikes have inevitably led to a sharp decline in sales for supplier companies, resulting in severe cash flow shortages,” the statement read.
“Our member companies are scrambling to secure funds just to pay employee salaries and maintain minimal operations.”
The association emphasized the difficulty in obtaining financial relief, noting, “This [securing funds] is not an easy task. We lack collateral, and even if we manage to secure loans, the high interest rates are deeply concerning.”
The Association of GM Korea Suppliers issued an impassioned plea on August 22 for a rapid resolution to the ongoing labor negotiations at GM Korea. (Image courtesy of Yonhap)
GM Korea’s labor union has been engaging in partial strikes since July 3, spanning over a month and a half. The key points of contention in the labor negotiations include demands for a 300% performance bonus and a monthly base pay increase of 159,800 won.
The impact of these labor actions has been significant. In July, GM Korea’s production plummeted by 52.6% compared to the same month last year, with only 19,885 vehicles produced — over 10,000 units short of the initial target of around 30,000.
August’s production is estimated to have been disrupted by about 6,000 units due to ongoing partial strikes.
The association warned of a potential domino effect if the situation persists.
“If even one or two supplier companies collapse, it could lead to supply disruptions. This could push all GM Korea suppliers into a cash crunch, potentially causing the entire GM Korea parts supply ecosystem to collapse,” the statement cautioned.
Moon Seung, the chairman of the association, underscored the far-reaching implications of the dispute.
“Including the employees of supplier companies and their families, between 250,000 to 300,000 people are directly or indirectly affected by GM Korea’s stability,” he said.
“The recurring cash flow shortages year after year are wearing us down.”
GM Korea’s supplier network is extensive, with 276 primary suppliers and an estimated 2,700 to 3,000 secondary and tertiary suppliers.
Kevin Lee (kevinlee@koreabizwire.com)
